Freight transport boss banned after using red diesel in his fleet

Scott McClung (47) was the sole director of SDS Logistics (Bonnybridge) Limited, a company registered as freight transport by road and based in Leslie Park, Denny, Stirlingshire.

After six years, however, the company ceased trading on 15 August 2016 when it was placed into liquidation, with an eventual deficiency to creditors of £1,860,934.

An investigation by the Insolvency Service following the liquidation found that between May 2014 and April 2017, SDS Logistics misused close to 1.7 million litres (approximately 1,688,648 litres) of rebated Gasoil, otherwise known as red diesel, in their road vehicles.

Gasoil is a rebated fuel, dyed red, for identification purposes. It can be used in registered agricultural or construction vehicles, such as tractors, excavators, cranes and some other non-road applications such as boats, and carries a significantly reduced tax levy compared to Derv, the white diesel fuel used in ordinary road vehicles.

But it is illegal to use red diesel in vehicles registered for and used on public roads.

SDS Logistics’ misuse of the fuel was first detected when HMRC officials visited SDS Logistics’ premises in April 2016 and found four vehicles had been misusing red diesel.

HM Revenue & Customs levied an excise duty of £790,456 and a penalty of £553,210 but SDS Logistics failed to pay, leading to its liquidation.

On 13 February 2018, Mr McClung gave a disqualification undertaking to the Insolvency Service, which was accepted by the Secretary of State, on 21 February 2018. The disqualification is from 14 March 2018 and is effective until 14 March 2027.

Robert Clarke, Investigations Group Leader at the Insolvency Service, said: “The substantial period of this disqualification reflects the fact this director put his financial interests above all else in taking advantage of this subsidised fuel. The majority of similar businesses pay the proper duty on the fuel they use, and carry that legitimate cost within their trading strategy.

“This was a blatant disregard by a director to obtain an unfair competitive advantage.”